Hello, Power Profit Traders!
Welcome to Earnings Season – Q2, 2022!
July is here and corporation will be reporting about their success, failures and future expectations over the next several weeks.
Traders speculate on the direction of a stock’s price movement once a company reports earnings, but there is a right and wrong way to go about capitalizing on earnings.
Volatility around a company’s earnings report is usually heightened. Option trading volumes increase for speculative or hedging purposes and this activity causes huge inflation to option premiums.
Don’t follow the flock of sheep.
Trading options immediately before an earnings report and hoping for a move in your anticipated direction after the report can pay off, but very often the trades lead to loss.
Take a look at the chart below which illustrate potential price movement ahead of earnings.
USB price movement two weeks before earnings – April 2022
USB’s stock price moved nearly 13 percent ahead of its report and the option premiums became inflated during this time.
There are two significant benefits from trading ahead of earnings instead of trading through earnings.
The first benefit a trader can receive by trading ahead of earnings is a significant movement in the stock’s price as speculation occurs. As long as price moves in the direction you need it to, the trade can be successful.
A second benefit a trader can receive when trading ahead of earnings is a significant increase in implied volatility – an option’s premium.
This is where my Operation Surge Strike program really pays off.
Increasing implied volatility is a huge boost to success!
When implied volatility rises ahead of earnings it can boost profits as the stock’s price moves in your desired direction, but it can also significantly soften the blow when the trade goes against you.
Having a winning trade ahead of earnings feels a lot like being crowned “Smart Trader of the Year.”
By comparison, when trading through earnings and the stock moves in the wrong direction, it can feel like you just got smacked upside the head with a stupid stick!
My software, which I call BRUTUS, is designed to help find the optimal stocks to trade around earnings.
Recover portfolio losses faster.
The S&P 500 has dropped over 20% this year and has taken a toll on investment portfolios. With an impending recession and uncertainty about the length of time it will take for portfolios to recover, there are ways to capture profits this year and recuperate portfolio losses at a faster pace.
Option Straddle trading ahead of earnings
It’s no secret that I absolutely love using options for earnings trades. Not only can it cost less than buying or shorting stock, but we don’t always have to pick a specific direction for the stock and hope we’re right
Using straddle option trades allows us to be successful whether the stock moves up or down sharply.
Our earnings trades usually last days – not weeks or months.
NET $115 Call/Put Option Straddle (opened 4/12; closed 5/4)
65.54% Return
NUE $150 Call/Put Option Straddle (opened 4/6; closed 4/20)
55% Return
It’s not rocket science. Learn about Straddle Trading by clicking here.
Learn more about how we’re conquering earnings through Operation Surge Strike. Our members receive trade alerts from Surge Events through the technology I call BRUTUS.
Find out what BRUTUS can do to enhance your portfolio by clicking here!
The recessionary conditions we’re experiencing need not hold you back from
It’s time you join us, and together we’ll make the Best of the Rest of this year!
See you soon,
Tom Gentile
America’s #1 Pattern Trader
